The Future of Institutional Crypto: Market Outlook and ETH ETFs | Chen Fang - BitGo

[Music] GM Gates welcome to day two in the sport Castle my name is Lauren holstead from mojito super excited to be here been coming to eth Denver for many many years went to college here so it's always a fun reunion to be back in Denver I hope everybody's enjoying the great weather super Sunny this year um hope everybody's recovering from last night if you partied and got great swag out in the main hall excited about today May great talks this morning so what want to start it off with the future of institutional crypto market and eth ETFs handing it over to Chen from bitgo welcome Chen hello good morning great to be here uh my name is Chen I am the chief Revenue officer at bitgo uh quick 30 seconds about me I've been in crypto for a long time uh started mining Bitcoin December of 2012 was pretty early in ethereum as well but got distracted because I was working for one of Davis Sax's uh companies way back then um 2017 started my own company went full-time into digital assets 2020 that company merged with bitgo and I've been uh at bito ever since uh really quickly about bito we are one of the world's largest institutional uh digital asset infrastructure providers on Earth we work with a number of large fexs we work with a number of large Banks and traditional Finance institutions and governments around the world as well we do everything under the sun custody trade Finance this is margin borrow lend Etc uh we do settlement we do collateral management everything that you can think of we do we also work with a number of folks here at e Denver the protocols the foundations all of them use us for token management token investing Etc so lots of good stuff in terms of today's uh kickoff we're going first talk about institutional adoption and exactly where things are where things stand today I will talk a little bit about what more we can do to bring more institutions into the space and I have 30 seconds at the at the very end this is my own version of my Market Outlook per se I'm not sure how many of you were up late partying or the other of us who were uh glued to our phones looking at the price movements last night but man oh man it's been a wild 24 hours all right let's get started with institutional adoption and the current status quo so if you think about where we were a year ago and compare that to the the current state of things things have improved quite a bit after president Trump arrived in office a year back on the SEC front under Gary's regime um it was it was pretty rough right it was uh uh regulation by enforcement what does that mean it basically means that um instead of providing super clear rules about how things should work clear laws clear Frameworks the the many companies inside of our space all they got were notices letters lawsuits we're talking about hundreds of these things filed by that regulator against all of these different types of companies inside of our space on the other end of the spectrum right on the banking side the fed the the the OCC right the FDIC these regulatory bodies on the banking side they were sending these notes these hidden memos to all the banks whether large or small the credit unions all the way up to the largest banks warning them about the dangers of digital assets why this asset class isn't ready for Mass and guess what those Banks complied a number of large companies inside the space got squeezed from a bank perspective meaning our bank account access got cut off some of the banks even went under as part of that process so it was pretty rough well guess what both on the SEC front and on the banking front things have become a lot better right if you look at what happened over the last even 48 Hours Gemini's lawsuit the lawsuit against Gemini was dropped the sec's lawsuit against consensus right who is the parent company behind metamask was also dropped I think things are just getting started and it's going to get a lot better from the from the institutional uh adoption side talking to all these Banks similar story right if you think about how things how things looked over a year ago you had these small pockets of folks inside these large companies right we're talking the largest banks in the world world promoting this this idea of adding digital assets as another asset class that the banks can interact with well guess what most of these small pockets of evangelists Within These large Banks they weren't seeing much traction we're seeing changes we're talking to basically everybody inside of traditional Finance right now and there's movement there's definitely movement furthermore from a uh a Sab 121 perspective this was literally a a way of using accounting rules to to to lock things down the publicly traded companies due to Sab 121 basically had handcuffs on they could not add this asset class as part of their portfolio of assets that they support due to accounting rules how how mind-blowing is that guess what sab11 after Trump took office has been repealed replaced with Sab 122 things are opening up very excited uh quick not about ETF specifically the Bitcoin ETF was introduced January of 2024 they ethereum ETF was introduced May of 2024 both have seen quite a bit of adoption um using Bitcoin as a benchmark so if you look at what it what what the numbers from the last 24 hours the last 48 hours the total percentage of Bitcoin market cap inside of ETFs is around 9% which is actually a massive number right um same goes for the the 24-hour daily trading volume it's it's around there as well between 6 to 9% over on the ethereum side it's about 2.5% and 2.5% so using Bitcoin as a benchmark I think there's definitely more room to grow from the theory and perspective all right Switching gears let's talk about what additional things we can do to open our arms to additional institutional adoption and additional institutional Capital the first thing I want to talk about here is Market structure right there's a reason why trafi is complicated there's a reason and it fundamentally it's designed to protect the end consumers if you think about selling a share of Nvidia selling a share of Amazon these traditional Securities in the traditional markets what is actually happening under the hood how many companies quote unquote are involved in that process the answer is it's actually pretty complicated and there's a bunch of companies involved you as an end consumer do not simply create an account at an exchange right if you go to NASDAQ and say hello NASDAQ can i k in an exchange account please the answer is like no who are you what you do is you work with Brokers you work with Robin Hood you work with Fidelity right you have your own broker these Brokers have their own custodians those custodians have clearing mechanisms underneath there's a slew of exchanges in the middle and on the other side whether you're buying or selling there's another broker there's another custodian right there's a whole swath of these companies in the middle each specializing in what they do best to protect your trades and your assets if you think about crypto what do we have we have one Exchange in the middle you sign up for let's say coinbase as an example coinbase is basically all of those companies bundled into one right and you know if there was one thing that we do to introduce better Market structures so that these large traditional finance companies trust crypto and Trust digital assets is to do a simple thing let's separate the the roles and responsibilities between an exchange and a custodian at the very least let's do that separation to protect the customers right or at the very least if you're you're if you're an exchange please stop putting hundreds of millions if not billions of your client funds on ledgers on consum grade Hardware right and losing it I'm talking about the the bit hack from last week right if you are a traditional Finance institution and you're wandering around in this space and you see it as headline crypto exchange loses $1.4 billion does that give you confidence to move in money of course it doesn't give you confidence so this concept of better Market structure needs to be introduced in crypto the other thing on the far other end of the spectrum is defi so why are we all here why do we believe in ethereum it's because we believe in some of these fundamental defi Concepts using coinbase again as another Benchmark right think about trade volumes doing the last bull run for coinbase versus trade volumes in this bull run for coinbase if you look at the the the numbers that were published in their corate reports the trade volumes are actually back up to where we were right back in the last bull run which is awesome but but if you double click into the numbers it's actually very interesting the percentage of retail trades and Retail volume was far less than the last Bull Run far less the majority of this runup for coinbase specifically is on the institutional side which means the institutions are for sure getting in but the question is where did all the retail folks go the answer is if you again look on chain the retail folks went directly to the decentralized applications which is something that all of us here should be very very proud about seriously the the thesis that we had for many many years is indeed coming true the scalability concern concerns we had around decentralized applications is being resolved defi works and frankly coinbase is pretty scared about this this is why they're investing so heavily in Bas how do we apply these same defi concepts for institutions and bring institutions directly into defi I think that is a good question that all of us should think about and if we're able to unlock that we're talking about massive amounts of volumes and capital coming directly on chain all right last bit in terms of my outlook for 2025 again last night was pretty rough I was awake to the wee hours of the morning um doing a bunch of things for various customers um I I do think there's going to be a bit more short-term contraction choppy waters for the next couple weeks next couple of months but fundamentally I think we are at the the beginnings the first couple endings of this baseball game right Trump just got to the White House we have over three and a half years plus left to go I do think medium to longterm we're going to see things rebound and you know hopefully we'll hit all-time highs in the next couple years uh overall I think the the crypto markets are open the capital markets are open Trump is in the White House and he's appointing all sorts of really Pro crypto folks in various places so that being said I'm very excited about the the years to come let's go thanks guys [Applause]